Should You Invest in the Indian Pharmaceutical Industry?

Stocks in the Indian Pharmaceutical Industry have been a hit and miss in recent times. Prices have been soaring and sliding with no real patterns emerging from the industry as a whole. In May 2017 the Pharma Index (NIFTY) was at its lowest point in the last three years while in Sep 2017 the prices were on a sharp rise and had gained an incredible 11% even though the whole market was on a low. With such rapid changes in the stocks should you really invest your money in the Indian Pharma Industry?

There have been some issues plaguing the Indian pharmaceutical industry. The market for Indian drugs in the United States has rather fallen due to certain issues with the regulatory bodies and price erosion. Furthermore, there have been severe restrictions on drug prices in the local market, which have really not sustained the activity of the manufacturers.

What you need to pay attention to, though, is that fundamental companies like Cipla, Zydus Cadila Healthcare, Dr. Reddy’s Laboratories and some others are very strong regardless of stock swings. These large companies take into account the possible challenges they might be facing and act accordingly.

The valuations of the pharma stocks in the current market are quite low and this could be a good time to invest in the Indian pharma industry.

As of writing this article, the current market price (CMP) of Cipla on Bombay Stock Exchange (BSE) is 595.25. It is currently in a state of a steady decline from the high of 654.80 that was seen on the 6th of Nov 2017. The market sentiment is currently very positive for this stock and the recommendation across the board is that you should buy. The company has received plenty of positive news surrounding its new TB drug, which should help it to move off its current slump.

If we were to look at the state of Zydus Cadila Healthcare, it also seems to be experiencing a drop. Since Nov 6th 2017, the stock has dropped nearly 80 points in the span of a month. The CMP for the company is currently 424.10 (as of writing this article). Although there is a strong buying signal for Zydus Cadila Healthcare, some financial analytics predict the share price will drop even further.

Dr Reddy’s Laboratories stock prices have also fallen by almost 150 points since last month, but indications are that it is on the rise now. As of writing this article the price of Dr Reddy’s Laboratories was 2241.05.

All this, however, is just speculation, and all advice should be taken with a pinch of salt. The Indian pharmaceutical industry might be facing a few hurdles that it needs to cross. The overall signs, however, look very promising.